With inflation rates hovering at a 10-year high, consumer prices in food, transportation, and other basic goods and services have reached worrying levels. While even the affluent struggle, the low-income population of Bangladesh have been hit the hardest.
‘Sarathi- Improving Financial Health’, the flagship financial inclusion project of Swisscontact Bangladesh, focuses on improving the financial health of low-income industrial workers, especially ready-made garment (RMG) workers. The average monthly income of an RMG worker is around BDT 12,000 which makes their average household income around BDT 23,699. With house rent going up 17% and rice prices increasing 18.5% compared to 2020, their food security has dropped to 86% in September from 94% in April in 2022. Majority of the lower-middle income and middle-income population were not prepared to face successive economic turbulence starting from the COVID-19 pandemic to the current global unrest which consequently gave rise to 30.9 million (18.54%) ‘new poor’ according to a recent study by PPRC-BIGD.
A recent study conducted in Egypt estimates that 1 unit rise in financial inclusion helps ease the effect of inflation by 4.66 units. Sarathi, during the process of financially including more than 76,000 RMG workers, observed the positive impact it made in their savings behavior, food security, remittances, etc. even during the pandemic.
To build on the positive experience and encourage further financial resilience, Sarathi organized a workshop to accelerate financial progress on 29 November 2022, at Doreen Hotel. Around thirty esteemed stakeholders from the central bank, commercial banks, mobile financial service providers, microfinance institutions, insurance providers, trade associations, fin-techs, RMG factories, and international fashion brands participated in the discussion titled ‘Financial Solutions to Foster Economic Resilience of the Low-Income Population of Bangladesh’.
The discussion highlighted pertinent issues such as lack of awareness on financial solutions that are offered from both the public and private sectors; product design from market insights on needs and behaviour of the bottom of the pyramid segment; and initiatives that can help minimize food insecurity and other negative impacts of inflation among low-income industrial workers. The workshop served as a platform for knowledge sharing and highlighted the importance of consolidated effort to tackle the economic turbulence more effectively in 2023.
Bipasha Sharmin Hossain, Team Leader of Sarathi- Improving Financial Health’, Swisscontact Bangladesh, delivered an insightful keynote speech highlighting the current scenario of the financial ecosystem and the ongoing economic turmoil to set the context for the discussion moderated by Rumana Akhter Tulee, First Assistant Vice-President of Bank Asia.
To conclude the insightful discussion, Jayasree Bagchi, Director of Financial Inclusion Department of Bangladesh Bank said, ’This workshop has brought forward an amazing opportunity for knowledge dissemination between the supply and demand side of the financial ecosystem. With collective effort I believe we can mitigate the economic turbulence in 2023.’